The Fund delivered gross returns of ~5% for the December 2019 quarter and ~36% for the 2019 calendar year – ~13% higher than the All Ordinaries (accumulation) index over the same time period. Since inception in February 2016 the Fund has, on average, achieved 19% p.a. gross returns – ~6% higher than the All Ordinaries (accumulation) index.
Put into perspective, a $250,000 investment into the Fund when it first started nearly four years ago would be worth over $412,000 today!
As at 31 December 2019 the Fund had a 4 star overall rating by Morningstar and was also ranked #5 out of 106 Funds based on performance for the year and #3 out of 94 Funds over the last 3 years.
Prudent risk management within an investment portfolio includes maintaining a focus on target individual stock weightings. With strong price growth in several portfolio positions during the early part of the December quarter we increased the frequency of our normal monthly review of portfolio weightings to weekly.
During October and the early part of November, our holding in Paradigm Pharmaceuticals increased beyond a weighting at which we felt, even with continued investor inflows, was in investors’ best interests. We made the decision to sell half our holding, a transaction that was completed at significant profit. As things turned out our decision was proven to be correct as the price of the stock undertook a correction during December.
The history of our Paradigm investment makes for profitable reading and underpins our confidence in our investment process and review. The Fund acquired the bulk of our position in Paradigm at an average of 70 cents per share, reduced our position shortly before a recent capital raising (which we took part in), reduced a little more at $3.00 and made the most recent reduction described above at an average of $3.55.
We continue to be confident in the future growth prospects for Paradigm and our intention to retain our current holding was confirmed at our most recent Investment Committee meeting in early January.
For some time, we had been waiting the outcome of litigation relating to our holding in Cash Converters. This matter was in our opinion a major factor in the share price not reaching the
levels we felt represented the company’s intrinsic value. The settlement of the court case has seen an uplift in the share price.
In December we commenced the acquisition of a position in a company new to our portfolio, a company that has been on our watchlist for more than two years and had recently seen its share price move to levels that we feel represent an opportunity with strong upside. We look forward to providing information on this acquisition upon reaching our desired weighting in the portfolio.
About the Collins St Value Fund
The Collins St Value Fund is a high conviction, benchmark unaware Australian Equities Fund that is monthly priced and available to wholesale investors only through an Information Memorandum.
Currently the Fund holds a portfolio of ~20 positions across a selection of gold, uranium, financial services, retail and pharmaceutical names as well as a ~27% cash allocation for impending opportunistic asset acquisitions.
Investors in the Collins St Value Fund do not pay any fixed management fees. In order to align the interests of investors and the portfolio management team, and to ensure a strong focus on capital preservation and capacity management, the only remuneration received is performance based. This arrangement requires portfolio returns to be above the risk-free rate and is subject to a high-water mark.